Ukraine, the US: Hill of beans.
Also: Russia, the Middle East, the EU, China, Venezuela, Guyana, and Peru.
UKRAINE. UNITED STATES. Hill of beans.
Congress dashes Zelensky’s hopes.
Senate Republicans blocked a $106 billion funding package for Israel and Ukraine on Wednesday after the White House refused to include migration reforms. A record 12,000 encounters were recorded at the southern border on Tuesday.
INTELLIGENCE. Funding for Israel is expected but Ukraine looks uncertain, with the blame placed on Republicans. Yet Democrats have also been unwilling to meet halfway on a mounting border crisis, particularly as a potential conflict brews in Venezuela. Either way, the omens are bad for Volodymyr Zelensky, who cancelled a video briefing to Capitol Hill on Tuesday. Zelensky separately told G7 leaders Moscow was waiting for Western unity to collapse.
FOR BUSINESS. Washington excels in brinkmanship, and many are holding out hope, but Congress only meets for another week and Ukrainian weapons are running out. The House meanwhile aims to vote on impeachment hearings into Joe Biden next week and a series of new GOP vacancies, from George Santos's district in New York to Kevin McCarthy's in California, mean voices from the base – many of whom oppose Ukraine funding – will only get louder.
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RUSSIA. THE MIDDLE EAST. Putin it out there.
Moscow projects a renewed confidence.
Vladimir Putin met Saudi Crown Prince Mohammed bin Salman in Riyadh on Wednesday following a meeting with the UAE's president in Abu Dhabi. On Thursday, Putin will host Iranian President Ebrahim Raisi for talks in Moscow.
INTELLIGENCE. Symbolically, Putin wants to show he can still travel, despite an ICC arrest warrant, and that Russia is still in the game, with Western efforts in Ukraine and Israel faltering. But economically, he faces a larger challenge. Recent OPEC+ production cuts – which Russia, the UAE and Saudi Arabia agreed, but many others didn’t – have failed to boost oil prices. Sanctions may not have crimped Russia’s growth, but they are harming its fiscal position.
FOR BUSINESS. Unless oil prices recover from five-month lows, funding Russia’s Cold War-level military budget will lead to cuts elsewhere. Though a cold start to winter could see oil inventories drop, they’re so far holding up, particularly in China. Moreover, it's the US, not Saudi Arabia, which is now the world's swing producer. With US exports at record levels, unless shale production falls, the efforts of Moscow and Riyadh will be outplayed in the short term.
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EUROPE. CHINA. Steady as Xi goes.
Brussels and Beijing attempt to stabilise ties.
EU President Ursula von der Leyen and European Council President Charles Michel met Xi Jinping on Thursday for their first in-person talks in four years. Italy formally told China on Wednesday it was leaving the Belt and Road Initiative.
INTELLIGENCE. The summit was never going to be easy, and Rome’s timing hasn’t helped, but both sides want stability as they transit an uncertain period. China is smarting from a credit outlook downgrade by Moody’s and mixed factory output data. Europe’s slowdown has been capped off by a budget crisis in Germany. And one thing they can at least agree on is Volkswagen’s factory in Xinjiang has not used forced labour, per an auditor report on Tuesday.
FOR BUSINESS. The summit did not result in a joint statement or any breakthrough deals, but neither does it presage any imminent problems (besides the broader issue of China-US competition and a technology arms race). That said, longer-term challenges are mounting. China’s ties with Russia are harming European security and contributing to the euro’s decline as a trading currency. European diplomacy is seen to be unfairly damaging Belt and Road’s reputation.
VENEZUELA. GUYANA. Law of the jungle.
Maduro moves on Essequibo, the opposition, and the oil majors.
A Guyanese military helicopter disappeared near the Venezuela border on Wednesday. Nicolas Maduro on Tuesday said he had ordered the army's mobilisation and issued a new official map following Sunday’s Essequibo referendum.
INTELLIGENCE. Mobilisation may not mean invasion – most of Essequibo is dense jungle and Brazil has made clear it will prevent the use of its more accessible adjacent territory – but Venezuela hopes it can bully Guyana, which has a population 35 times smaller, but plenty of oil. It also hopes to bully firms like Chevron, active in both countries, and Exxon, which operates in Guyana and whom Caracas claims to be funding the beleaguered Venezuelan opposition.
FOR BUSINESS. Venezuela has long blamed US oil firms for its many (self-inflicted) woes. And while this may resonate with the 10 million who allegedly voted for annexation, Maduro's maladministration has also caused 8 million middle class and educated Venezuelans to leave.More can be expected to leave even if there's no invasion. US sanctions could snap back over detained Americans and this week's arrest of opposition staffers for “treason”.
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PERU. Begging a pardon.
A former dictator’s release raises tensions.
Ex-president Alberto Fujimori was released from a 25-year jail term on Wednesday after a court restored a 2017 pardon. President Dina Boluarte's approval fell after she hit back at a formal complaint last week from the attorney general.
INTELLIGENCE. Like Fujimori, Boluarte is popular with business but not on the street. And like Fujimori, she has now been accused of genocide. Her support has hovered around 10-20% since she controversially took power from leftist Pedro Castillo in what started as a “self-coup” but ended as an impeachment. While Fujimori, 85, is out of political action, his legacy lives through allied members of Boluarte’s cabinet, who have dragged her own politics to the right.
FOR BUSINESS. The attorney’s complaint, which could see Boluarte removed from office and jailed herself, seems extreme, but speaks to an ongoing tension in Peruvian politics that began with colonisation and led to Fujimori’s war against the Shining Path guerrilla movement, killing up to 70,000. Riots and strikes during Boluarte's tenure has led to dozens killed and a state of emergency in several districts. Last week, nine were killed at the Poderosa gold mine.